1. Employment Social Impact BondsBB
- Welcome
- We are excited to present to you here today.
- Our intentions are to
present you N4G and how it came about,
a few selected projects;
then reflect on the learning of our journey over the last year and also our work previously
Obviously we want to make it interactive and would love to hear & share your experiences in this space

2. Supporting you to develop social impact bonds
Stage 1: Define the social issue
Questions to answer
What is the social issue needing to be solved?
Which population should be targeted?
What age range are we looking at?
Which geographical area?
Activities
Assess stakeholder engagement
Assess the feasibility of measurement with each target population
Key Question: Is there an engaged commissioner interested in tackling the social issue?
Stage 2: Develop Social Intervention Strategy
What do the target population need?
Where should the service intervene?
What are the current gaps in service provision?
What services will meet the needs of the target population to improve the outcome?
Analyse research reports
Consult with public and voluntary sector organisations that work in the local area
Focus group with target population
Develop hypothesis on the most appropriate intervention strategy
Key Question: Are there compelling intervention programmes to solve the social issue?
Stage 3: Develop the outcome metric
What programmes could be funded as part of a SIB?
Do they have track record of improving outcomes?
What are their costs?
Can they operate alongside each other?
Which metric should be used to evaluate outcome?
How do we structure a baseline/ control against which to measure the impact (including population size)?
Where are there cost savings from improved outcome?
What is value of cost saving?
Map landscape of potential providers
Review quantitative evaluations of programmes meeting needs of target group
Review delivery budgets to understand delivery cost
Work with commissioner & researchers to evaluate alternatives
Ensure proposed metric is operationally feasible & meets investors’ needs
Working with commissioner’s analytical team to estimate cost saving from an improved outcome
Key Question: Can a robust outcome metric be developed?
Stage 4: Develop financial model
Can the SIB financial model work?
What proportion of cost savings will need to be shared with investors?
Activity
Build a financial model and run a range of scenarios
Key Question: Does the financial model generate savings to the Commissioner and a return to investors in an acceptable time frame?

3. Lessons learnt from investors
Success based payment to Delivery Partner
Non-diversified risk of one Delivery Partner
Equity-style risk should assume equity-style returns
Investors’ model likely to price the deal with discounted success

4. Lessons learnt from working with social ventures
Buy in from Board & Senior Management is key
Investment readiness preparation is essential – business planning, financial modelling and ensuring capacity to deliver
Need for historical data
Need for collaborative attitude
Commitment and willingness to acquire new skills e.g. data management

5. The stages of creating a social impact bond
Originate Deal
Identify government champions & savings opportunities
Vet models of intervention
Perform nonprofit due diligence
Conduct financial modeling
Secure Public Sector Contract
Develop & secure government contract
Secure authorisation from commmissioner for multi-year contract
Formulate partnership agreement with metrics & payment terms
Structure instrument
Develop operating model & structure investment vehicle
Articulate cash flows, including financial & social returns for target milestones
Finalise methodology, including metrics & evaluation strategy
Raising Capital & Execution
Recruit investors
Finalise terms and negotations
Sign contracts
Issue the instrument & raise investment capital
Managing SIB over its lifetime
Provide active ongoing project & data management & financial intermediation
Modify intervetions and structures as needed
Coordinate third-party evaluation

6. Thank you! Contact us : dominic@numbers4good.com
DLThanks so much for your time, we’ve found it really helpful to reflect on our journey so far and we hope you’ve found it interesting. Have you got any questions?